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The SP Corporation makes 41,000 motors to be used in the production of its sewing machines. The overage cost per motor at this level of
The SP Corporation makes 41,000 motors to be used in the production of its sewing machines. The overage cost per motor at this level of activity is: An outside supplier recently began producing a comparable motor that could be used in the sewing machine. The price offered to SP Corporation for this motor is $25.45. If SP Corporation decides not to make the motors, there would be no other use for the production facilities and none of the fixed manufacturing overhead cost coutd be avolded. Direct tabor is a vartable cost in this company. Tho annuat financiat odvantage (disadvantage) for the company as a result of making the motors rather than buying them from the outside supplier would be: Multiple Choice ($77,900) $264,450 112750 $190.650
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